2 Answers
2

Several dictionaries mention this, but of course not under the lemma videoed!

When you look (for instance at Oxford online) at the verbvideo, you will find this:

VERB (videos, videoing, videoed)

[WITH OBJECT] chiefly British

1 Make a video recording of (something broadcast on television):how many programmes have you videoed and never managed to watch?

2 Film with a video camera:he videoed our wedding

That said, many people will indeed frown at this. The usage is mentioned as chiefly British.
The issue with your alternatives is that you are being recorded may be interpreted as a sound recording being made (a recording studio usually records music, not film), and you are being observed means someone is watching, but no record of it may be created.

I have seen videotape being verbed (you are being videotaped), but I doubt that is a better alternative.

That's about the verb that some dictionaries mention. Now about the latter part of the question!
– Maulik V♦Jul 25 '14 at 6:32

Sorry, I first reacted to your statement that Oxford did not have it - see my link ;) As for the latter part, now there it is :)
– oerkelensJul 25 '14 at 6:34

2

Videotape as a verb is just dandy in the US; I use it in project proposals every week. Tape is fine, too, but is subject to the same objection as record--it doesn't distinguish videotaping and audiotaping. On the ground we mostly say shoot, but in this context it would hardly do to say You are being shot! :)
– StoneyB on hiatusJul 25 '14 at 11:43

@StoneyB You're being shot! would certainly corroborate some existing prejudices about the US of A...
– oerkelensJul 25 '14 at 11:45

It would certainly alarm the parents, though the kids would probably get a kick out of it.
– StoneyB on hiatusJul 25 '14 at 11:48

"You are being videoed" is equivalent to "You are being recorded on video" [or "...on closed-circuit television], in the same way that stating "this event is televised" means the same thing as "this event is being broadcast on television".

You can not express "you are being videoed" as "you are being verb", where verb is a single word and is not a verbed noun without losing part of the meaning. If you are ok with losing some of the intended meaning then I feel your suggestion "you are being recorded" is "best", though the expansion to include a phrase is better.